About Pick of the Day

Every day, I will try to find what I believe is the best looking short term currency trade setup for the upcoming trading day or week. If you're a forex newbie, it can be tricky trying to figure out how to look at charts and draw lines. My goal is help you understand the psychology behind price movements in the foreign exchange markets, so you can learn to analyze your own currency charts and trade on your very own. I will post my ideas and/or reviews through out each session right here, on Twitter and on Facebook.

Pick of the Day: EUR/USD – Trade Closed

We just saw the release of the Dec. Durable Goods report with a solid number at +3.1%. November’s number was revised up to +2.2%. The Dollar got a little boost from the news and our trade, which entered during the morning Euro trading session, hit pt1 and half of our position was closed locking in +20 pips.

I moved the stop on the second half to breakeven soon after the report, and it stopped out at breakeven real quick as the market retraced. For those who have not adjusted their stop on the second half, you can probably close your position slightly above breakeven. Congrats to those who caught some pips!

For today’s pick, we’ll take a look at EUR/USD once again. We saw weak data from both the German Ifo Business Climate Index and US Existing Home Sales, and it looks like USD sentiment is still strong and traders ignored the weak housing data. We will continue to ride that sentiment with a short trade in this pair.

We do have event risk later today with the Durable Goods numbers at 08:30 EST and US New Home Sales at 10:00 EST. Both are projected to be positive numbers for the US economy, but of course, we’ll just have to wait and see.

So, if the pair rises we’ll jump short near the pivot area in between the 38% and 50% Fib line. Of course if the pair drops we will short below the previous low. Here’s a couple of trade ideas:

Short EUR/USD at 1.2955, stop at 1.2990, pt1 at 1.2935, pt2 at 1.2915

or

Short EUR/USD at 1.2905, stop at 1.2945, pt1 at 1.2885, pt2 at 1.2865

Remember to never risk more that 1% of your account on any single trade, so please adjust your position sizes accordingly.